China's factory activity grows at slightly slower pace as raw materials costs surge
Skip to main content
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
The Business Standard
WEDNESDAY, MAY 25, 2022
WEDNESDAY, MAY 25, 2022
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
China's factory activity grows at slightly slower pace as raw materials costs surge

Global Economy

Reuters
31 May, 2021, 11:45 am
Last modified: 31 May, 2021, 11:49 am

Related News

  • First direct container ship to China leaves Ctg port
  • US says China and Russia bomber drill shows depth of their alignment
  • UN Human Rights Commissioner Bachelet begins visit to China
  • China says it will take targeted steps to support the economy
  • Airbnb says will shut domestic business in China from July 30

China's factory activity grows at slightly slower pace as raw materials costs surge

The official manufacturing Purchasing Managers' Index (PMI) inched lower to 51.0 in May, against analyst expectations that it would remain unchanged from April at 51.1, data from the National Bureau of Statistics (NBS) showed on Monday

Reuters
31 May, 2021, 11:45 am
Last modified: 31 May, 2021, 11:49 am
A worker wearing a face mask works on a production line manufacturing bicycle steel rim at a factory, as the country is hit by the novel coronavirus outbreak, in Hangzhou, Zhejiang province, China March 2, 2020. China Daily via REUTERS
A worker wearing a face mask works on a production line manufacturing bicycle steel rim at a factory, as the country is hit by the novel coronavirus outbreak, in Hangzhou, Zhejiang province, China March 2, 2020. China Daily via REUTERS

China's factory activity growth slowed slightly in May as raw materials costs grew at their fastest pace in over a decade, weighing on the output of small and export-oriented firms.

The official manufacturing Purchasing Managers' Index (PMI) inched lower to 51.0 in May, against analyst expectations that it would remain unchanged from April at 51.1, data from the National Bureau of Statistics (NBS) showed on Monday.

The official PMI, which largely focuses on big and state-owned firms, has stood above the 50-point mark that separates growth from contraction for over a year.

While the Chinese economy has largely shaken off the gloom from the Covid-19 pandemic, officials warn the foundations for the recovery are not yet secure amid problems like higher raw material costs and the pandemic situation overseas.

Iris Pang, chief economist for Greater China at ING, said in a note that "external demand will likely remain flat" as economic recoveries in the United States and parts of Europe are likely to be "offset by increasing Covid cases in ASEAN, which is the biggest trade partner of China."

Some emerging Covid-19 cases in China's Guangdong province, where most electronic factories are located, continued semiconductor chip shortages and high commodity prices are also among the challenges facing producers, she added. 

A sub-index for new export orders stood at 48.3 in May, down from 50.4 in the previous month and slipping sharply into contraction.

A sub-index for raw material costs in the official PMI stood at 72.8 in May, up from April's 66.9 and hitting the highest level since 2010.

Prices for commodities such as coal, steel, iron ore and copper have surged this year, fuelled by post-lockdown recoveries in demand and easing liquidity globally.

China's policymakers have repeatedly expressed concern about rising commodity prices in recent weeks and called for stricter management of supply and demand and to crack down on "malicious speculation." 

"We expect commodity prices to stabilize in the coming months," said Louis Kuijs, head of Asia economics at Oxford Economics.

Tougher oversight on spot and futures markets and increased global commodity supply in the second half of 2021 should help reduce cost pressures on China's firms, he said.

In addition to surging raw material prices, Chinese factories are struggling with high shipping costs and an appreciating Chinese currency. Some are able to pass on the higher costs to overseas customers, while some small firms are stopping taking orders to avoid losses. 

A sub-index for the activity of small firms stood at 48.8 in May, sharply down from April's 50.8.

Firms continued to lay off workers and at faster pace, the official data also showed.

In the services sector, activity expanded for the 15th straight month, and at a faster pace, with the non-manufacturing PMI index rising to 55.2 from 54.9 the month before.

China posted a record 18.3% growth in the first quarter, but analysts expect the brisk expansion to moderate later this year. 

Policymakers have pledged to support job-creating small firms that were hit harder by the coronavirus pandemic.The central bank is trying to cool credit growth to help contain debt risks, but is treading warily to avoid hurting the economic recovery.

"The mixed data strengthens our case for policy stability in the near term, especially before the CCP's centenary celebration in July," said analysts at Citi in a note, referring to the ruling Communist Party.

Top News / World+Biz / China

china / slower pace / raw material cost / Hike

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Now amnesty in the offing to bring back laundered money
    Now amnesty in the offing to bring back laundered money
  • India greenlights wheat exports to Bangladesh on G2G basis
    India greenlights wheat exports to Bangladesh on G2G basis
  • File photo of Chattogram port. Photo: Minhaj Uddin/TBS
    First direct container ship to China leaves Ctg port

MOST VIEWED

  • Photo: Collected
    Tata Steel says India export tax could alter output targets
  • The Ford logo is pictured at the 2019 Frankfurt Motor Show (IAA) in Frankfurt, Germany. REUTERS/Wolfgang Rattay
    Ford to pay $19.2 million over hybrid, pickup claims
  • The company logo for Oracle Corp. is displayed on a screen on the floor at the New York Stock Exchange (NYSE) in New York, U.S., September 18, 2019. REUTERS/Brendan McDermid
    Oracle to win unconditional EU nod for $28.3B Cerner deal -sources
  • Photo: Getty Images
    Oh Snap! Social media firms sink after bleak warning from Snapchat parent
  • The logo of the Russian Sberbank Europe AG bank is seen on their headquarters in Vienna, Austria, February 28, 2022. REUTERS/Leonhard Foeger/File Photo
    Russia's Sberbank pays in roubles on dollar-denominated Eurobonds
  • Toyoda revealing Toyota’s “showroom of the future” in December. Photographer: Kiyoshi Ota/Bloomberg
    Toyota to cut global production plan by 100,000 in June

Related News

  • First direct container ship to China leaves Ctg port
  • US says China and Russia bomber drill shows depth of their alignment
  • UN Human Rights Commissioner Bachelet begins visit to China
  • China says it will take targeted steps to support the economy
  • Airbnb says will shut domestic business in China from July 30

Features

The balcony railings of the Boro Sardar Bari in Sonargaon. Made of cast iron, these railings feature vertical posts with intricate designs on top. Photo: Noor-A-Alam

The evolution of railing and grille designs

13h | Habitat
A Russian army service member fires a howitzer during drills at the Kuzminsky range in the southern Rostov region, Russia January 26, 2022. REUTERS/Sergey Pivovarov/File Photo

3 months of Ukraine war : Miscalculations, resistance and redirected focus

15h | Analysis
Musk is denying the sexual harassment allegation that surfaced this week. Photo: Bloomberg

Elon Musk’s crazily banal week 

1d | Panorama
Asus Zenbook 14 Flip OLED: A touch of brilliance to your life

Asus Zenbook 14 Flip OLED: A touch of brilliance to your life

1d | Brands

More Videos from TBS

Bangladesh Bank relaxes rules to deal with dollar crisis

Bangladesh Bank relaxes rules to deal with dollar crisis

3h | Videos
Russia claims use of laser weapons, Ukraine denies

Russia claims use of laser weapons, Ukraine denies

4h | Videos
Celebrity Gallery in Rajshahi like Madame Tussauds

Celebrity Gallery in Rajshahi like Madame Tussauds

5h | Videos
Burger-lover student becomes self-dependent, provides employment

Burger-lover student becomes self-dependent, provides employment

5h | Videos

Most Read

1
Tk100 for bike, Tk2,400 for bus to cross Padma Bridge
Bangladesh

Tk100 for bike, Tk2,400 for bus to cross Padma Bridge

2
A packet of US five-dollar bills is inspected at the Bureau of Engraving and Printing in Washington March 26, 2015. REUTERS/Gary Cameron
Banking

Dollar hits Tk100 mark in open market

3
Bangladesh at risk of losing ownership of Banglar Samriddhi
Bangladesh

Bangladesh at risk of losing ownership of Banglar Samriddhi

4
BSEC launches probe against Abul Khayer Hero and allies
Stocks

BSEC launches probe against Abul Khayer Hero and allies

5
The reception is a volumetric box-shaped room that has two glass walls on both the front and back ends and the other two walls are adorned with interior plants, wood and aluminium screens. Photo: Noor-A-Alam
Habitat

The United House: Living and working inside nature

6
Illustration: TBS
Banking

Let taka slide

The Business Standard
Top
  • Home
  • Entertainment
  • Sports
  • About Us
  • Bangladesh
  • International
  • Privacy Policy
  • Comment Policy
  • Contact Us
  • Economy
  • Sitemap
  • RSS

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net

Copyright © 2022 THE BUSINESS STANDARD All rights reserved. Technical Partner: RSI Lab